Court of Appeal refuses security for costs - inability to pay caused by applicant

Speed Read

In Tír Na N-Óg Projects (Ireland) Ltd v P.J. O'Driscoll & Sons [2019] IECA 154, Peart J, for the Court of Appeal, found that the applicant's failure to institute judicial proceedings to obtain a default planning permission within the prescribed time limit was the prima facie cause of the respondent's inability to satisfy a future costs order.

The Court of Appeal upheld the decision of the High Court not to order security for costs.

Background

The respondent company had made an application for planning permission, and the planning authority had not responded within the statutory period of two months . The respondent was thus entitled to a default planning permission as long as the development did not constitute a material contravention of the Development Plan in force at the time. 

The Planning Authority refused to acknowledge the default permission in correspondence, and the applicant herein was instructed to issue judicial review proceedings, seeking an order of mandamus in respect of the permission. 

The applicant firm failed to issue the judicial review proceedings within the prescribed time limit, and the respondent issued proceedings in professional negligence. In that context, the applicant issued an application for security for costs under s.52 of the Companies Act 2014.

Decision

The respondent did not dispute that it would be unable to meet the applicant's costs if it was unsuccessful at trial. The High Court had established that the applicant had a bona fide defence under the Statute of Limitations Act 1957, and that finding was not the subject of appeal.

Thus, the central issue to be determined was whether the respondent could show "special circumstances" disentitling the applicant to the relief. Specifically, the respondent claimed that its inability to pay the applicant's costs was a result of the applicant's wrong.

The Court of Appeal  considered that  the appropriate test to be applied in determining whether a respondent's impecuniosity could be attributed to an applicant is set out in a four-stage approach outlined by Clarke J in Connaughton Road Construction Ltd v Laing O'Rourke Ireland Ltd  [2009] IEHC 7.  Crucially, however, Peart J. affirmed the approach of the High Court in holding that each stage of that test must be met only at a prima facie level (not to the level of the balance of probabilities).

He held that to establish something on a prima facie  basis: 

"the plaintiff must do more than merely assert the proposition on affidavit, but must bring forth some evidence which is cogent and credible, which corroborates the contention being made. Any affidavit filed in response by the defendant may affect the trial judge's view as to that cogency and credibility, but the trial judge's task remains to decide if prima facie evidence has been adduced, and not to determine as a matter of probability whether or not the impecuniosity of the plaintiff has or has not been brought about by the wrongdoing alleged against the defendant." 

The court considered that the details provided in two affidavits sworn on behalf of the respondent as to the financing plans for the development of the site in question were sufficient to establish, on a prima facie  basis, that the development would have proceeded had planning permission been obtained, and that it would have yielded significant profit, given the healthy state of the Irish economy in 2002/3.​

Thus, the applicant's alleged negligence had ​prima facie caused a loss which resulted in the respondent's inability to pay. 

The Court of Appeal upheld the High Court's refusal to order security for costs.

For more information on this topic please contact Ciaran Joyce or any member of A&L Goodbody's Litigation and Dispute Resolution team.

Date published: 12 June 2019